Debt Consolidation Calculator: Does One Loan Actually Save You?

Consolidation only helps if the rate actually drops

"Combine your payments into one" is a convenience pitch, not a savings pitch. What saves you money is a lower rate. Take three debts — $8,000 at 24%, $5,000 at 22%, $12,000 at 9% — and your balance-weighted blended rate is 16.4%. Roll them into an 11% loan with a 1% ($250) fee and, paying the same $600/month, you save about $2,281 in interest and finish a few months sooner. Push the consolidation rate up to 20% and it flips to a loss, even though you've still "simplified" to one payment.

That's why this tool compares against the avalanche method, not against paying minimums. Attacking your highest-APR debt first is free and often captures most of the benefit people hope to get from consolidating — so the loan has to beat that, after its fee, to be worth it.

How the math works

1. Blended APR = Σ(balance × APR) ÷ Σ(balance) — your real average rate, weighted by how much sits at each rate.
2. Keep path: all debts are simulated month by month; every dollar above each debt's interest goes to the highest-APR balance first (avalanche).
3. Consolidate path: (total balance + origination fee) is paid off at the consolidation rate, at the same monthly payment.
4. Interest saved = keep-path interest − consolidate-path interest − fee. Positive means the loan wins.

Source: CFPB — what is debt consolidation and the Federal Reserve G.19 series for personal-loan and credit-card rates.

Math runs locally. Inputs never leave your browser. Source on github.

Where this doesn't apply

• You'd keep using the paid-off cards. The biggest real-world failure of consolidation is running the balances back up after clearing them. Then you have the loan AND new card debt. The math here assumes you stop borrowing.
• The loan term stretches the debt out. A consolidation loan with a long term can lower the monthly payment while raising total interest — same trap as a mortgage refi. This tool holds the payment constant to avoid hiding that; if you'd actually pay less per month, your interest could be higher than shown.
• It's a 401(k) or home-equity loan. Borrowing against retirement or your house to clear cards converts unsecured debt into secured (or taxable) debt with very different risks. That's a different decision than a personal loan.
• Your credit can't get a good rate. The whole strategy depends on qualifying for a rate below your blended one. If the best offer is near or above 16-20%, consolidation isn't your lever — the avalanche method is.

What to actually do

1. List every debt with its real balance and APR — that's what sets your blended rate, the number to beat.
2. Get pre-qualified (soft pull) for a consolidation loan so you know the actual rate and fee before deciding.
3. Only consolidate if the rate clears the blended rate by enough to cover the fee — this tool shows the break-even instantly.
4. Keep the monthly payment the same after consolidating; don't let a lower required payment become an excuse to pay less.
5. If you can't beat your blended rate, skip the loan and run the Debt Payoff Strategy tool to order your avalanche instead.